Correlation Between Western Asset and Prudential Qma
Can any of the company-specific risk be diversified away by investing in both Western Asset and Prudential Qma at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Western Asset and Prudential Qma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and Prudential Qma Strategic, you can compare the effects of market volatilities on Western Asset and Prudential Qma and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Western Asset with a short position of Prudential Qma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Prudential Qma.
Diversification Opportunities for Western Asset and Prudential Qma
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Prudential is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Prudential Qma Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Qma Strategic and Western Asset is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Western Asset Municipal are associated (or correlated) with Prudential Qma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Qma Strategic has no effect on the direction of Western Asset i.e., Western Asset and Prudential Qma go up and down completely randomly.
Pair Corralation between Western Asset and Prudential Qma
Assuming the 90 days horizon Western Asset Municipal is expected to under-perform the Prudential Qma. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Municipal is 3.15 times less risky than Prudential Qma. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Prudential Qma Strategic is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,094 in Prudential Qma Strategic on September 14, 2024 and sell it today you would earn a total of 155.00 from holding Prudential Qma Strategic or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Prudential Qma Strategic
Performance |
| Timeline |
| Western Asset Municipal |
| Prudential Qma Strategic |
Western Asset and Prudential Qma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Prudential Qma
The main advantage of trading using opposite Western Asset and Prudential Qma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Prudential Qma can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Prudential Qma will offset losses from the drop in Prudential Qma's long position.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Prudential Qma vs. Baron Health Care | Prudential Qma vs. Prudential Health Sciences | Prudential Qma vs. Eventide Healthcare Life | Prudential Qma vs. Invesco Global Health |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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